Tip:
Highlight text to annotate it
X
{\rtf1\ansi\ansicpg1252\cocoartf1138\cocoasubrtf470 {\fonttbl\f0\fswiss\fcharset0 ArialMT;}
{\colortbl;\red255\green255\blue255;\red26\green26\blue26;\red0\green0\blue239;} \margl1440\margr1440\vieww10800\viewh8400\viewkind0
\deftab720 \pard\pardeftab720\sa240
\f0\fs24 \cf2 (Image Search: {\field{\*\fldinst{HYPERLINK "http://commons.wikimedia.org/wiki/File:Federal_Reserve.jpg"}}{\fldrslt
\cf3 \ul \ulc3 Wikimedia Commons}})\'a0\uc0\u8232 \u8232
\b BY SCOTT MALONE \b0 \uc0\u8232 \u8232
\b ANCHOR CHRISTINA HARTMAN \b0 \uc0\u8232 \u8232 Ben Bernanke made U.S.
history Wednesday unveiling the Fed\'92s next plan to help heal the economy. {\field{\*\fldinst{HYPERLINK
"http://www.cnn.com/"}}{\fldrslt \cf3 \ul \ulc3 CNN}} and the {\field{\*\fldinst{HYPERLINK
"http://www.bnn.ca/"}}{\fldrslt \cf3 \ul \ulc3 Business News Network}} have the details.\uc0\u8232
\u8232 \b \'93For the very first time in history
the U.S. Federal Reserve is directly linking interest rates to unemployment rates. Foreign
costs will not move until jobless rates fall below 6.5%.\'94
\b0 \uc0\u8232 \u8232 \b \'93Aside from promising to buy $45 billion
in US government bonds per month, and that\'92s on top of the $40 billion worth of mortgage-backed
bonds that they\'92re already buying.\'94 \b0 \uc0\u8232 \u8232 So how is Bernanke\'92s
plan being received?\u8232 \u8232 A writer for {\field{\*\fldinst{HYPERLINK "http://www.marketwatch.com/story/fed-now-sides-with-unemployed-2012-12-12"}}{\fldrslt
\cf3 \ul \ulc3 The Wall Street Journal}} says this is the first time the Fed has announced
a goal for the unemployment rate.\uc0\u8232 \u8232
\b \'93By saying that it anticipates that it will keep interest rates extremely low
until the unemployment rate falls to 6.5% (and as long as inflation doesn\'92t get out
of control), the Fed has become more aggressive about turning the economy around.\'94
\b0 \uc0\u8232 \u8232 {\field{\*\fldinst{HYPERLINK "http://www.foxbusiness.com/economy/2012/12/12/growing-sentiment-says-raising-interest-rates-could-benefit-economy/"}}{\fldrslt
\cf3 \ul \ulc3 Fox Business}} spoke with J.P. Morgan\'92s chief global strategist, who believes
the Fed\'92s plan to freeze interest rates actually hurts the people it\'92s meant to
help.\uc0\u8232 \u8232 \b \'93Many U.S. households hold more interest-bearing
assets such as savings accounts, money market funds and certificates of deposit than interest-paying
liabilities such as mortgages \'85 [the Fed\'92s decision] \'85 hurt those households because
those interest-bearing accounts are basically stagnant, earning very little money.\'94
\b0 \uc0\u8232 \u8232 But {\field{\*\fldinst{HYPERLINK "http://www.usatoday.com/story/money/business/2012/12/12/fed-buys-treasuries/1762459/"}}{\fldrslt
\cf3 \ul \ulc3 USA Today}}\'92s Paul Davidson says the Fed\'92s plan could lead banks to
lend more, though it could also make it more difficult for the Fed to sell the bonds to
head off inflation once the economy heats up.\uc0\u8232 \u8232 As for the bank\'92s
plan to buy a combined $85 billion in bonds and securities per month, a {\field{\*\fldinst{HYPERLINK
"http://www.nytimes.com/2012/12/13/business/economy/fed-to-maintain-stimulus-bond-buying.html?ref=business"}}{\fldrslt \cf3 \ul \ulc3 New York Times}} writer says
Fed officials are already seeing some good signs, but room for sustained returns could
be limited.\uc0\u8232 \u8232 \b \'93Average rates on 30-year fixed mortgages
had fallen by about 0.23 percentage points since September \'85 But the Fed is already
purchasing more than half of the volume of new mortgage securities, leaving little room
to expand those purchases without essentially replacing the private market.\'94
\b0 \uc0\u8232 \u8232 NBC\'92s {\field{\*\fldinst{HYPERLINK "http://www.nbcnews.com/business/economywatch/fed-keep-rates-low-until-jobless-rate-falls-below-6-1C7578242"}}{\fldrslt
\cf3 \ul \ulc3 Economy Watch}} says buying treasury debt in the open market helps create
more demand, and with record low mortgage rates helping revive the housing market and
giving homeowners lower monthly payments, consumers have more cash to spend.\uc0\u8232
\u8232 The Fed also said it will consider additional information, besides the jobless
rate, when it eventually weighs raising the short-term interest rate.\
}